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What You Need to Know Before You Borrow Money from Lenders
- Lending money is easier and safer than ever before with regulated UK direct lenders.
- There are many options available to you depending on the amount you wish to borrow and the duration of the loan.
- Even if you have bad credit, there are loan options available on the UK lending market.
There are times when you need to borrow money to tide you over in an emergency or buy some urgently required items.
However, before you borrow money there are several important factors you need to consider first, such as your ability to keep up with repayments, how much the loan will cost in terms of interest rates, and of course, how you’re going to spend the money.
You will also need to find the best lenders with the best rates and terms. There are many ways of borrowing money but you will need to ensure that your borrowing doesn’t lead you into a debt problem.
Let’s look at some of the most important things you need to know before you borrow money.
Do you really need to borrow money?
This is an important question to ask yourself before you take a bank loan, sign up for a credit card, or take a personal loan from a direct lender. With the current economic uncertainties, most people are opting to pay back what they already borrowed rather than add more loans.
However, there comes a time when you must absolutely borrow money to get through a rough patch in life. For example, if an urgent need for financial assistant arises between pay checks, you can always look for other ways of financing as long as you can afford to pay back the money that you intend to borrow.
Can you borrow money with a poor credit rating?
If you have a bad credit record, you could be thinking that there are no borrowing options available for you except family and friends or loan sharks. However, the truth of the matter is that there are many borrowing options available today including payday loans and other short-term loans.
Short-term loans provide an easy and convenient way to get funds when you urgently need financial assistance. Short-term loans differ from standard loans in several ways. For instance, they are quicker to process, can be acquired for small amounts, faster to pay back, and are in some cases provided without credit rating considerations. You can get a short-term loan from an online lender whether you have good credit or not.
However, keep in mind that a majority of lenders normally do a credit check to ensure that you are capable of paying back the loan. Short-term loans are meant to help people with poor credit records find a way to borrow money.
Some lenders advertise their businesses as no-credit-check loans but they will actually run a credit check to ensure that you are suitable for the loan and how much you can be loaned. Your credit rating may not be a qualifying factor for your loan application but can still influence the amount you receive.
How much can you borrow in a short-term loan?
More short-term loans are available for small amounts ranging from £150 to £2,500. The advantage of borrowing small amounts is that you will not be tempted to borrow more than you need or can pay. When you borrow too much you may end up paying a lot more in terms of interest and other charges. Remember the more you borrow the more you will be charged. It is therefore important to borrow what you need only and not more.
What are the typical repayment terms for short-term loans?
Most short-term loans are paid in one instalment which is the day you receive your next pay check or when you have money available. This ensures that you repay the loan quickly which is a great relief when you know that you no longer have a loan hanging around your neck for a long time.
If you foresee problems in paying the loan and lump sum at once, some lenders allow you to pay back in several instalments. However, this option can be more expensive as the interest is spread over a longer period of time but if it helps to manage your payments better, the extra payment is well worth it.
What information do you need to apply for a personal loan online?
Most lenders do not require a lot of information in your online loan application. You may be required to provide the following details:
- Your residential address
- Details about your payslip and income frequency
- Financial and employment information
- Bank account number
- Bank statements
- Identity and proof of age and nationality document
How can I compare different short-term loan lenders?
It is always a wise idea to compare different lenders before you commit yourself to a short-term loan. The comparison gives you an idea of the range of prices of different loan options available on the market. It also shows you the best lender with the lowest interest rates and other charges as well as the best terms for the loan.
At PickaLoan.co.uk, we provide you with a helpful lending panel that shows you different lending institutions and companies with the best quality loans around. Our goal is to help you make the best decision when looking for a lender with suitable terms for your unique needs. PickaLoan.co.uk provides these loan comparison services free of charge.
How can you find the cheapest loan option?
When comparing available loan options, we recommend you check the total amount of money you’ll have to pay after interest and other charges have been factored into the loan. The best way to determine the cost of a loan is by checking its APR.
APR is short for Annual Percentage Rate which shows how much your personal loan, credit card, or any other loan will cost you in a whole year. The higher the APR the more the loan will cost you in the long run. It is therefore wise to look for a lender with the lowest APR.
Once I borrow money, am I limited in how I use it?
Once your loan has been approved and the money sent to your bank account, you can use the funds for any important purpose including home improvement projects, car repairs, pay pending bills, and any other urgent need. You can use the money to your discretion.